Monday, February 24, 2020

February 24th Links

  • "One of the seasoned high end contractors I spoke with is a friend I've known for 25 years. He told me he's not taking on any new projects. He sees all the warning signs of a market correction and he's quietly wrapping up his existing work and stepping out of the game for a while. The reason he's still a successful contractor is he noticed the signs of the last couple of on coming crashes in 2007 and 1999." [Granola Shotgun]
  • "For a decade, this kind of thing hasn't happened with San Francisco real estate. But it just did. Down 41% in a day." [PlainSite]
  • The most important thing for any person who wants to build a life-long career in investing is to keep remembering: you have to be in the game. No matter how much conviction you have on a single idea, you have to size your position appropriately so that even you suffer maximum loss expected (or worse, unexpected), you still are "in the game", and can take the loss and move on. On the other hand, if you are called out by blowing up your fund, it is a permanent damage to your reputation. This is very different than Silicon Valley (Perelman graduated from UC Berkeley, according to his LinkedIn profile, atmosphere from where may or may not affect his mindset), where you can still start over freshly even with series of start-up failures. The reason is because the society will benefit from, thus will encourage more tries of inherently risky innovation which could create significant value if only small portion of them succeeds. [Tao of Value]
  • "The Bankruptcy Code distinguishes between a 'proof of claim,' which may be filed by a 'creditor,' and a 'proof of interest,' which may be filed by an 'equity security holder.'" In re Winstar Commc'ns, Inc., 554 F.3d 382, 414 (3d Cir. 2009) (quoting 11 U.S.C. § 501(a)). "In the Bankruptcy Code, the distinction between creditors (who hold 'claims' against the estate) and equity investors (who hold 'interests' in the estate) is important, for holders of claims receive much more favorable treatment than holders of interests." In re Insilco Techs. Inc., 480 F.3d 212, 217 (3d Cir. 2007). "Thus, if a filed claim is rejected on the ground that it is not a claim at all, but an interest, then the holder of that interest is relegated to the end of the line, where any recovery is unlikely." Id. at 218. "Even in the flexible world of Chapter 11 reorganizations, the absolute priority rule, 11 U.S.C. § 1129(b)(2)(B), requires that equity holders receive nothing unless all creditors are paid in full." Id. at 218, n.10. [IN RE SPECTRUM ALLIANCE, LP]
  • That's what you see with Michael Bloomberg. The difference between him and the core of the Republican Party is so narrow that light can barely squeeze through. He is for unlimited economic freedom for the oligarchs at the top of the system and maximum regulation of the lower classes. You can't question the morality of him owning a bottleneck on financial information, but he can tell you how many shakes of salt you can have on your fries during your assigned day at the burger joint. [Z Man]
  • It was hands down the best presidential primary debate of the cycle and maybe in decades. It was riveting. The veterans on stage were on fire and at the top of their game. It is being called a very bad night for Mike Bloomberg. It was not. It was a catastrophe. The only question is whether it is recoverable. Can he turn it around in the debate next week, and after? Is it possible to recover from a night so bad? The mystery is the surprise of it. What were the mayor and his aides and advisers, professionals of high caliber, thinking? He was on mute and seemed not to anticipate what was coming. Maybe they were thinking: Play against type, don't be the entitled billionaire, shrug it off, let the others exhaust themselves with their tiny fisticuffs. In the end you'll be the last grownup standing. If that was the strategy they mistook the moment. [WSJ]
  • Do you frequent Bring a Trailer? If you do then you're likely aware that the site's full name is "Bring a Trailer Full of Money Because Everything Here is Pretty Dang Pricey." The online sales venue has gone from being a boutique locale for the odd classic to the mainstream channel for every seller that avers to "know what I have" and prices their precious offering accordingly. Because of that reputation, any time you see a BaT car referenced on some other classified platform, you have to expect that some serious negotiations on that ad’s price will be required. [Jalopnik]
  • How does it work to hire an older heavier heavily tattooed workforce? Not profitably at first. Chairman Cao: "American workers are not efficient and output is low." He's a regular cheerful hard-working guy who founded the company in 1987. Americans are sent over to China so that they can see how a profitable line runs. At least one is too fat to fit all of his tattoos under the provided safety vests. The Chinese plant is like a ballet compared to the American plant. Workers are young, slender, and don't object to their 12-hour shifts. How to explain the difference in output and quality? An American fluent in Chinese says to a counterpart in China: "Most American workers are there to make money, not to make glass." The biggest disappointment, however, turns out to be in the high paid American managers who proved ineffective and disloyal in the chairman's view. They are fired and the new Chinese president who spent half his 53 years in US explains to the young Chinese supervisors that Americans shower children with praise and that's why the resulting grownups are all overconfident. He reminds the Chinese overseers to keep praising the American line workers just for showing up. [Phil G]
  • Who would you pick if it boiled down to Trump or Sanders, I ask. For the first time in our exchange, he pauses. "I think I might find it harder to vote for Bernie than for Trump," he says. "There's a long time between now and then. The Democrats would be working very hard to find someone who is as divisive as Trump. But with Bernie they would have succeeded." But you would say that, I reply, because you are a billionaire. Sanders is proposing a wealth tax on people like you. "I don't like that at all," says Blankfein. "I don't like assassination by categorisation. I think it's un-American. I find that destructive and intemperate. I find that just as subversive of the American character as someone like Trump who denigrates groups of people who he has never met. At least Trump cares about the economy." [FT]
  • Softbank also has failed after months of negotiations since October to convince its banks to loan it $3 billion it needs to fund its outstanding tender offer for WeWork shares, confirming my concerns that even the inordinately long period to complete the tender by April 1st may not be long enough. Indeed, it took more than two months for WeWork to convince Goldman Sachs Group (GS US) to close a new Letter of Credit facility last week—even with Softbank forced to sign on as a co-borrower. No doubt the banks working with WeWork and Softbank remain alarmed that WeWork continues to light cash on fire as soon as it gets it, as indicated by sparse details in Softbank's third-quarter earnings report released the day after WeWork's facility was finally closed. [VB]
  • Leibig's law of the minimum says that plant growth is limited by whatever substance is present in the soil in the least adequate amount. Many times, this is nitrogen, which is why most of the world's civilizations independently discovered intercropping of legumes in order to add nitrogen to soil, as early as 12,000 years ago. Liebeg described agriculture's principle objective as "the production of digestible nitrogen," and as a 19th century chemist noted, "every vital phenomenon is due to some change in a nitrogen compound and indeed in the nitrogen atom of that compound". But nitrogen was very scarce for humanity, because plants cannot use atmospheric nitrogen, and the only technology for increasing soil nitrogen was the symbiotic nitrogen fixing bacteria associated with legumes. The result was that the nitrogen cycle had to be kept very tight, with nitrogen wastes being returned to the soil, and even going so far as to harvest nitrogen-rich seabird guano from islands off the coasts of South America. [CBS]

5 comments:

eahilf said...

t was hands down the best presidential primary debate of the cycle and maybe in decades. It was riveting. The veterans on stage were on fire and at the top of their game.

LOL -- holy shit, if that's the opinion of the WSJ, things are much worse bzw we're in a lot more trouble than I thought -- oh wait, it's a woman saying that -- never mind, and repeal the 19th.

Anonymous said...

Blood in the water:
https://www.theverge.com/2020/2/25/21152984/tesla-autopilot-safety-recommendations-ignored-ntsb-crash-hearing

Eahilf,

Agreed.

eahilf said...

I don't follow all the news closely anymore (it just pisses me off), and that includes TSLA accidents -- but here is a piece I found about the 2018 death of Wei “Walter” Huang on Hwy 101 in the SFBA (a highway I also drove many times before I left CA/the US):

Putting a Face to a Tragedy

I note these parts:

This is where a man plowed head-on into a barrier in his new Tesla X and died in the fiery aftermath. Details are starting to come out, and I’ve learned a few things: (a) his name was Walter Huang (b) he was a husband and a father in his thirties (c) he worked at Apple. ... The most interesting news to come out is that Mr. Huang had complained multiple times to Tesla that, as he approached this certain section of road, the car would try to lurch him toward a barrier. I suppose only by forcing the steering wheel away from the automated driving was he able to save himself. Again, I’ve passed this barrier hundreds of times, and it looks like this: ...

See the article for a map of Hwy 101 at the spot of the accident (that whole section seems new to me; no doubt a lot has been done since I left the SFBA in 1998).

Now, I'm not a genius working for AAPL, but here's what I don't understand: Why would anyone, let alone a husband and father of young children, presumably intelligent, continue to use Tesla's Autopilot, especially when motoring (can I say driving here? -- who was driving?) near a specific location where he had, apparently, previously noticed odd, if not downright dangerous, behavior? -- behavior so concerning he complained to TSLA about it "multiple times".

I don't get it -- can someone explain that to me?

eahilf said...

@Anonymous February 25, 2020 at 2:08 PM

Thanks for the link -- I read the article, and not be too nitpicky, but what it seems to say is that TSLA did not formally respond to the "recommendation" -- it doesn't necessarily mean TSLA made no changes, or changes less extensive than other manufacturers who did (formally) respond -- and obviously a formal response was not required by the NTSB:

“We ask that recommendation recipients respond to us within 90 days. That’s all we ask. Give us a response within 90 days. Tell us what you intend to do,” Sumwalt said. “But it’s been 881 days since these recommendations were sent to Tesla, and we’ve heard nothing.”

To me personally the following part is literally unbelievable, and if I may be politically incorrect for a moment, not really totally surprising, since I've met a number of Asians intelligent enough to work in high tech, yet also somehow lacking in basic common sense:

NTSB investigators found that the driver, Apple employee Walter Huang, had been playing a mobile game on his drive to work using a company-issued phone in the moments before he crashed into a concrete barrier on US-101 in 2018.

And remember: it just might be guys like him, people who lack basic common sense, who are developing Autopilot and other critical features at TSLA (and elsewhere in tech).

Anonymous said...

"Now, I'm not a genius working for AAPL, but here's what I don't understand: Why would anyone, let alone a husband and father of young children, presumably intelligent, continue to use Tesla's Autopilot, especially when motoring (can I say driving here? -- who was driving?) near a specific location where he had, apparently, previously noticed odd, if not downright dangerous, behavior? -- behavior so concerning he complained to TSLA about it "multiple times".

I don't get it -- can someone explain that to me?"


Yes. Tech workers - particularly software engineers - believe Musk is a god. They have a religious devotion to him and his nonsense. It's as simple as that. Humans are inherently religious. They either worship the Creator or the Creation (Romans 1:25), of which Musk is a part.

These people are also very arrogant - they think they're smarter and more righteous than you who drives his own car that runs on gasoline. You are part of the dark past - a user of fossil fuel who needs his own car. They are part of the glorious future of electric autonomous taxis that come whenever you need a ride.

Really, the people working at Apple are far from geniuses. They're smart, but good at only writing software. Most have no real engineering skills aside from the guys working in the chip fab.